John Lott's Website

5/01/2010

Warren Buffett thinks that the charges against Goldman don't hold water

Buffet isn't thrilled by the new financial regulations nor is he thrilled about Goldman being used as a justification.

Warren E. Buffett became the highest-profile defender of Goldman Sachs on Saturday, offering staunch support of the firm as it combats fraud charges from the Securities and Exchange Commission. . . .

what drew the most attention was Mr. Buffett’s full-throated support for Goldman. He drew upon some of the same points that Goldman has used in its own defense, including the sophistication of the investors the S.E.C. says were defrauded by Goldman’s lack of adequate disclosure in the deal. He said those investors should have conducted better due diligence. Of one investor, he said, “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.”

He also stood behind Mr. Blankfein. When asked whom he would select if Goldman needed to find a new leader, Mr. Buffett replied, “If Lloyd had a twin brother, I would vote for him.” . . .

Snap shot of polls by Rasmussen

Coverage of Immigration Rallies

Here are threats of violence. Lots of references to Nazis and Hitler. The Tea Party people were said to be Nazis because they criticized Obama's regulations as being fascist (note Nancy Pelosi). Will any major person make a similar claim against these Hispanic rallies? They obviously shouldn't, but they also shouldn't have made those comments against the Tea Party members.

As hundreds assembled on a street closed to autos a mile south of City Hall, a stakebed truck was festooned with a sign directed at Washington. In Spanish, it said "Obama hear us. We will die in the struggle."

It also displayed a quote from Mexican revolutionary Emiliano Zapata, proclaiming it better to die than to die kneeling.

Arizona Gov. Jan Brewer was labeled "the next Hitler" and "the new face of racism" on a sign carried by Long Beach City College student Cindy Lugo. "I think what (Brewer is) doing in Arizona is similar to what Hitler did in Germany," she said. . . .

Apparently the KNX article has been changed to remove this discussion. The quote: "Obama hear us. We will die in the struggle." and the rest of the discussion is available here.

How many people have been arrested at Tea Party rallies? From the Hill Newspaper:

Rep. Luis Gutierrez (D-Ill.) was arrested outside the White House on Saturday during a May Day protest for immigration reform. Guiterrez had been speaking to a crowd of hundreds at Lafayette Square when he announced that he was going to go to the White House fence with other protesters, sit down, and not move until he was arrested or until comprehensive immigration reform was signed. . . .

Police clashed with demonstrators at an immigration rally in suburban Broadview on Tuesday and dozens were arrested after they physically blocked authorities at an immigrant detention center. Two dozen people were arrested during the protest, were brought to the Broadview police station and were released on the equivalent of a ticket for blocking the road. . . .

Many of the signs targeted Gov. Jan Brewer, one reading "Stop the furor." One person dressed like Brewer was surrounded by dancers wearing shirts that read ICE, a reference to Immigration and Customs Enforcement. They danced to the 1990 Vanilla Ice rap song, "Ice Ice Baby," and occasionally ran into the crowd asking for ID while the Brewer character pulled her pants down to show pink underwear with the name of Maricopa County Sheriff Joe Arpaio on them. . . .

Not surprisingly the sizes of the crowds were exaggerated. 100,000 were expected in LA, but apparently Gloria Estefan isn't quite the draw that she once was.

Organizers estimated about 20,000 gathered at a park on Chicago's West Side and marched, but police said about 8,000 turned out. . . .

In Dallas, police estimated at least 20,000 attended a Saturday rally. . . . in Denver, where about 3,000 people rallied. . . . an estimated 7,000 protesters rallied in Houston, about 5,000 gathered at the Georgia state Capitol in Atlanta and at least 5,000 marched in Milwaukee. About 3,000 attended a Boston-area march. And in Ann Arbor, Mich., more than 500 people . . . . police in Tucson said an immigrant rights rally there drew at least 5,000 people. . . .

Elsewhere "More than 1,000 people marched through the streets of downtown San Diego on Saturday to call for immigration reform and the repeal of a hot-button new Arizona law."

So does all this add up to something around 100,000 nationwide?

Compare that to 2006 "when more than 1 million people across the country — half a million alone in Chicago — protested federal legislation that would have made being an illegal immigrant a felony."

Even the New York Times says that the Oil Spill problem is in part due to the slow Obama administration response

Even this relatively moderate criticism is in the Saturday newspaper, which is where you want to bury information. So will the NY Times raise the word "Katrina."

BP Is Criticized Over Oil Spill, but U.S. Missed Chances to Act By CAMPBELL ROBERTSON and ERIC LIPTONPublished: May 1, 2010 As oil edged toward the Louisiana coast and fears continued to grow that the leak from a seabed oil well could spiral out of control, the White House announced that President Obama would visit the region on Sunday morning.

Officials did not provide additional details. Mr. Obama, who was in Michigan on Saturday morning to give a commencement address, is scheduled to return to Washington for the White House Correspondents Dinner that evening.

His administration has publicly chastised BP America for its handling of the spreading oil gusher, yet a review of the response suggests it may be too simplistic to place all the blame for the unfolding environmental catastrophe on the oil company. The federal government also had opportunities to move more quickly, but did not do so while it waited for a resolution to the spreading spill from BP.

The Department of Homeland Security waited until Thursday to declare that the incident was “a spill of national significance,” and then set up a second command center in Mobile, Ala. The actions came only after the estimate of the size of the spill was increased fivefold to 5,000 barrels a day.

The delay meant that the Homeland Security Department waited until late this week to formally request a more robust response from the Department of Defense, with Homeland Security Secretary Janet Napolitano acknowledging even as late as Thursday afternoon that she did not know if the Defense Department even had equipment that might be helpful. . . .

As estimates of the spill increase, questions about the government's honesty in assessing the spill are emerging. . . . A government report obtained by the Mobile, Ala., Press-Register explains that "choke points" in the crumpled riser are controlling the flow from the so-called Macondo well at Lease Block 252 in the Mississippi Canyon. But scrubbing action from sand in the oil is further eroding the pipe. There are likely tens of millions of gallons in the deposit that BP tapped with the Deepwater Horizon.

"The following is not public," reads National Oceanic and Atmospheric Administration's Emergency Response document dated April 28, according to the Press-Register. "Two additional release points were found today. If the riser pipe deteriorates further, the flow could become unchecked resulting in a release volume an order of magnitude higher than previously thought."An order of magnitude is a factor of 10.

The Wall Street Journal reported Friday that John Amos, an oil industry consultant, said that NOAA revised its original estimate of 1,000 barrels after he published calculations based on satellite data that showed a larger flow.

The 5,000 barrels a day is the "extremely low end" of estimates, Mr. Amos told the Journal.

"There's a range of uncertainty, and it's very difficult to accurately gauge how much there is," BP spokesman John Curry told the Journal.

UPDATE: Never mind that Bush flew over Katrina the second day after the hurricane hit and that Obama took eight days to react, at least the Politico says that there are "Shades of Katrina in oil spill politics."

Fox News host Sean Hannity said the slow response to the spill came from “the very same people who were so fast to criticize George W. Bush.” Former Ark. Gov. Mike Huckabee, appearing on Hannity’s show, said that "If Katrina was George Bush's responsibility, this is Barack Obama's responsibility."

The White House pushed back hard on that line of attack Saturday, and so far anyway, the spill is far less serious than Katrina — not least because of the hurricane's massive death toll and its devastation of New Orleans. And the storm, unlike the leak, came with advance warning.

But Obama's team also appears mindful of the comparisons of the two situations - both affecting the Gulf Coast and requiring a significant federal response, including a visit by the president himself - and has been sending out numerous emails detailing the aggressive steps they’ve taken since the spill occurred to head off any linkage in the public mind. . . .

National Science Foundation and State of Virginia looking into whether Michael Mann committed fraud

A legal battle is heating up faster than the planet for embattled climatologist Michael Mann.

First word emerged that the inspector general for the National Science Foundation would look into the Penn State panel reviewing the climate scientist, who is currently director of the school's Earth System Science Center. Now the attorney general for his old employer the University of Virginia is planning an investigation, too.

According to a report in Charlottesville weekly The Hook, Virginia Attorney General Ken Cuccinelli has asked the University of Virginia to produce "a sweeping swath of documents relating to Mann’s receipt of nearly half a million dollars in state grant-funded climate research" conducted while Mann was at UVA between 1999 and 2005.

Should the AG uncover evidence of impropriety, the school could be commanded to return the funds, and pick up the cost of the AG's investigation.

The paper, tipped off by anonymous sources, has posted a PDF of Cuccinelli's formal request, a legal document called a civil investigative demand. In that letter, he demands production of information and documentary material relating to three papers Mann authored while at UVA, using a total of $484,875 of state grant money. . . .

4/30/2010

More on Arizona's new immigration law

A New York congressman who called for the league to move the 2011 game from Phoenix is the latest person to push for an economic boycott against the state in protest of the new law. Companies have been pulling conferences out of Arizona resorts while others have suggested consumers shun companies, such as US Airways, that are based in the state and have yet to condemn the the law.

"I think that when people, states, localities make decisions this monumental, they should know the full consequence of that decision," Rep. José E. Serrano, D-N.Y., said. "I think Major League Baseball, with 40 percent Latino ballplayers at all levels, should make a statement that it will not hold its All-Star Game in a state that discriminates against 40 percent of their people." . . .

A list of those upset about the law is here. The AP also incorrectly describes the law this way: "the law, which requires local and state law enforcement to question people about their immigration status if there's reason to suspect they're in the country illegally, and which makes it a state crime to be in the United States illegally."

Supporters of Arizona’s new law strengthening immigration enforcement in the state should take heart from today’s New York Times editorial blasting it. “Stopping Arizona” contains so many blatant falsehoods that a reader can be fully confident that the law as actually written is a reasonable, lawful response to a pressing problem. Only by distorting the law’s provisions can the Times and the law’s many other critics make it out to be a racist assault on fundamental American rights.

The law, SB 1070, empowers local police officers to check the immigration status of individuals whom they have encountered during a “lawful contact,” if an officer reasonably suspects the person stopped of being in the country illegally, and if an inquiry into the person’s status is “practicable.” The officer may not base his suspicion of illegality “solely [on] race, color or national origin.” (Arizona lawmakers recently amended the law to change the term “lawful contact” to “lawful stop, detention or arrest” and deleted the word “solely” from the phrase regarding race, color, and national origin. The governor is expected to sign the amendments.) The law also requires aliens to carry their immigration documents, mirroring an identical federal requirement. Failure to comply with the federal law on carrying immigration papers becomes a state misdemeanor under the Arizona law.

Good luck finding any of these provisions in the Times’s editorial. Leave aside for the moment the sweeping conclusions with which the Times begins its screed—such gems as the charge that the law “turns all of the state’s Latinos, even legal immigrants and citizens, into criminal suspects” and is an act of “racial separation.” Instead, let’s see how the Times characterizes the specific legislative language, which is presumably the basis for its indictment. . . .

Air Force One was about seven miles over Appalachia this week when President Obama dropped a bomb on his party.

Senate Democrats had that very day circulated an immigration reform proposal, and the Associated Press, receiving a leaked copy, reported on the "draft legislation."

But as Obama returned to Washington from Illinois Wednesday night, he walked back to the press cabin on the presidential aircraft and, in an impromptu Q&A, essentially declared immigration reform dead. He said "there may not be an appetite" for it.

Obama's retreat -- after encouraging senators only weeks ago to take up immigration reform -- clotheslined Senate Democrats. Since their proposal had already been leaked, they had no choice but to go ahead with the rollout of the plan Obama had just doomed. "I don't know in what context the statement was made last night," Senate Majority Leader Harry Reid told reporters at Thursday night's rollout. . . .

Obama, meanwhile, afraid of breaking his campaign promise to take up immigration legislation during his first year, tried to juggle immigration reform and climate change legislation -- and now he may wind up with neither. The lone Republican supporter of both efforts, Sen. Lindsey Graham (S.C.), has for the moment pulled out of both, justifiably feeling that he's been jerked around by Reid's maneuverings and Obama's mixed signals.

The whole episode is a reminder of what works and what doesn't about Obama's management style. When he engages forcefully, as he did in the final month of the health-care debate, the results are good. But when he hesitates and leaves matters to Congress, the results are poor.

After the extended health-care fight kept immigration off the agenda last year, Obama assured immigration groups in March that he would get it done this year. He summoned to the White House Graham and Sen. Chuck Schumer (D-N.Y.) who had been negotiating in good faith on an immigration proposal.

The two senators, at the president's urging, published an op-ed in The Post on March 19 outlining their plan, and Obama endorsed the idea. Then, in the absence of forceful leadership from the White House, it all fell apart. Obama called five Republican senators to lobby them on the immigration bill (Schumer and Graham told him they couldn't proceed without a second Republican sponsor) but came up empty. Reid, meanwhile, went rogue, proposing without consulting Graham to take up immigration before the climate bill. Graham, piqued, abandoned the Democrats on both pieces of legislation. . . .

Arizona House moves to clarify new immigration law

Given the distortions of the new Arizona immigration law by president Obama and others, the Arizona House has moved to change legal language to plain speaking language in a way that will at least try to make additional distortions move difficult. From the Arizona Republic.

The Arizona House approved several new changes to Arizona's new immigration law. The changes still need final approval from the Senate before being passed along to the governor. If Gov. Jan Brewer supports them, they would go into effect at the same time the new law would.

The phrase "lawful contact" would be changed to "lawful stop, detention or arrest" to clarify that an officer would not need to question a crime victim or witness about their legal status.

The word "solely" would be eliminated from the sentence "A law enforcement official or agency … may not solely consider race, color or national origin" in establishing reasonable suspicion that someone is in the country illegally.

Bill sponsor Sen. Russell Pearce, R-Mesa, said the intent is to clarify that "this bill prohibits racial profiling in any form." Bill opponents had argued that the word "solely" allowed officers to base their reasonable suspicion on race and color as long as it wasn't just one of them.

Rep. Kyrsten Sinema, D-Phoenix, said those two changes help clarify the bill, and lighten its impact somewhat. But she called a third change "frightening." . . .

If you believe the AP, labor markets adjust within days of a law being passed and months before it goes into effect

So why are illegals not being hired within just a few days of the new immigration law being passed in Arizona? Even assuming that it isn't stopped by the courts, the law doesn't go into effect for several months. While employers will adjust before the law goes into effect by starting to look for alternative sources of labor, it seems strange that they would stop hiring so quickly. I suspect that there is more than a little hyperbole in this piece.

Many of the cars that once stopped in the Home Depot parking lot to pick up day laborers to hang drywall or do landscaping now just drive on by.

Arizona's sweeping immigration bill allows police to arrest illegal immigrant day laborers seeking work on the street or anyone trying to hire them. It won't take effect until summer but it is already having an effect on the state's underground economy.

"Nobody wants to pick us up," Julio Loyola Diaz says in Spanish as he and dozens of other men wait under the shade of palo verde trees and lean against a low brick wall outside the east Phoenix home improvement store. . . .

Is Charlie Crist delusional?

Did he really think that the Dems would want to work with him to get him elected to the Senate? I suspect that his poll numbers are going to fall over time and that once he gets clearly into third place the poll numbers will drop quickly.

Charlie Crist, soon to be independent Senate candidate from Florida, tried to reach White House chief of staff Emanuel through intermediates. WH refuses to take the call. Dems plan big talent/money blitz for Kendrick Meek. BTW: Obama's approval rating in FL is in high 40s, per internal Dem polling. . . .

Puerto Rico looks to be the 51st State

More new campaign finance regulations

The Supreme Court decision in the Citizens United campaign finance case applied to companies as well as unions as well as independent organizations such as Citizens United, but the new bill would only look at changing the rules for companies.

They are planning to unveil their bill at a press conference Thursday morning in front of the Supreme Court, and have set the goal of passing their bill by July 4 – which still might make it difficult to enact the legislation in time to affect spending on the 2010 midterm congressional elections.

The House sponsors, who will introduce their bill inside the Capitol a few hours later, have set no such timeline, but Van Hollen has said he’s hopeful the bill could be implemented in time to affect newly legal ad spending in 2010 congressional races.

The specific language of the bills is eagerly awaited by advocates of reducing the role of money in elections, some of whom have complained that the vague legislative blueprints made public in recent weeks don’t go far enough.

The bill is to include provisions restricting the types of companies that could air campaign ads and require those that did to disclose precisely how much they spent on such ads – and possibly force their CEO’s to appear in them.

The goal is partly to discourage the types of previously prohibited spending legalized when the Supreme Court in a 5-4 decision ruled in favor of the conservative non-profit group Citizens United, which had argued that its free speech rights were impinged by decades of law restricting political spending by corporations, unions and other organizations.

In addition to the heightened disclosure provisions, the Van Hollen and Schumer bills would limit spending on political advertising by companies that received government bailouts from the Troubled Asset Relief Program, as well as those with government contracts or that are more than 20 percent foreign owned. . . .

"Death Wish" British Style

Charles Bronson became famous as the New York City who became a one-man vigilante squad. Playing the role of Paul Kersey, the Bronson character sought revenge after his wife is brutally murdered by street thugs. I response Bronson tries to reduce crime on the mean streets of NYC after dark. He tries to make it risky for the criminals to hunt down victims by letting them know that sometimes victims can defend themselves. Well, I just saw a trailer for a movie called Harry Brown starting the incredible Michael Caine. I don't go out to see many movies, but Caine is such a powerful actor that I am really looking forward to this movie.

Synopsis: Set in modern day Britain, HARRY BROWN follows one man’s journey through a chaotic world where teenage violence runs rampant. As a modest, law abiding citizen, Brown lives alone. His only companion is his best friend Leonard. When Leonard is killed, Brown reaches his breaking point. HARRY BROWN is a powerful, character driven thriller starring two-time Academy Award® winner Michael Caine in a tour-de-force performance.

The trailer for the movie can be found here. A small segment of the movie can be seen below.

New Fox News piece: Obama's Economic Failure on Unemployment

As President Obama travels today to Illinois, Iowa, and Missouri, he will try to convince voters that his economic policies are creating jobs. But a year after Obama claimed that the stimulus had started creating jobs, it is not just the general public that believes that the stimulus was a waste of money, so do the experts. This week a new survey from the National Association for Business Economics found that 73 percent of business economists believe that the stimulus "has had no impact on employment."

Many will point out that the unemployment rate has soared well above what the Obama administration predicted would occur if the stimulus were enacted. On Feb. 28, 2009, Eleven days after the stimulus bill signed into law, the White House predicted that the national unemployment rate would average 8.1 percent in 2009 and then decline to an average of 7.9 percent in 2010. Clearly things got much worse than the administration predicted. While the unemployment rate stood at 8.1 percent in February, 2009, by the end of last year it had risen to 10 percent. It still remains very high at 9.7 percent.

As President Obama and other Democrats have correctly pointed out many times, this has been a worldwide recession. Why not compare the changes in unemployment rates in other countries to the unemployment rate in the U.S. . . .

Obama's relationship with the press

— Day-to-day interaction with Obama is almost nonexistent, and he talks to the press corps far less often than Bill Clinton or even George W. Bush did. Clinton took questions nearly every weekday, on average. Obama barely does it once a week.

— The ferocity of pushback is intense. A routine press query can draw a string of vitriolic e-mails. A negative story can draw a profane high-decibel phone call or worse. Some reporters feel like they’ve been frozen out after crossing the White House.

— Except toward a few reporters, press secretary Robert Gibbs can be distant and difficult to reach — even though his job is to be one of the main conduits from president to press. “It’s an odd White House where it’s easier to get the White House chief of staff on the phone than the White House press secretary,” one top reporter said.

— And at the very moment many reporters feel shut out, one paper — The New York Times — enjoys a favoritism from Obama and his staff that makes competitors fume, with gift-wrapped scoops and loads of presidential face time. . . .

Is Obama making deliberate lies about the Arizona immigration bill?

At his talk in Iowa today, President Obama denounced those who would "exploited for political purposes" the immigration issue.

this law that just passed in Arizona — which I think is a poorly conceived law — (applause) — you can try to make it really tough on people who look like they, “might be illegal immigrants.” One of the things that the law says is local officials are allowed to ask somebody who they have a suspicion might be an illegal immigrant for their papers. But you can imagine, if you are a Hispanic American in Arizona — your great-grandparents may have been there before Arizona was even a state. But now, suddenly, if you don’t have your papers and you took your kid out to get ice cream, you’re going to be harassed. That’s something that could potentially happen. That’s not the right way to go.

Whether one likes the law or not it is sad to see a law so distorted. Minor point, you don't have to produce "Your papers." One has to provide a driver's license, some state issued ID, or some federally issued ID. The current federal law requires that we have to provide much more than that to get a job in order to deal with Illegal aliens. Why is that OK, but not the Arizona law? The Arizona law is not extreme. It basically means that the police must already have pulled you over or arrested you for some completely unrelated reason than citizenship issues and then must have a "reasonable suspicion" for asking for the ID. Asking people for ID for someone who you have arrested or detained based solely on race is illegal.

Most Americans oppose letting government regulate salt intake

The latest Rasmussen Reports national telephone survey shows that just 33% of Americans think the government should set limits on how much salt Americans can eat. Most adults (55%) disagree and don't think it's any of the FDA's business. Another 12% are not sure.Perhaps one reason why Americans don’t see a need for government regulation of their salt intake is that 77% of adults say they already monitor the ingredients in their food at least somewhat closely on their own. Only 21% of Americans say they do not closely check what’s in their food. Those numbers include 31% who say they monitor their food very closely and only six percent (6%) who don’t watch what they eat at all.Still, most Americans (54%) hold a favorable opinion of the FDA, while 39% view it unfavorably. Those results have changed little since a survey conducted three years ago. . . .

Wasn't the health care bill supposed to reduce firm costs?

Democrats Admit Companies Were Correct In Warning Of Major Losses Due To ObamaCarePosted by: Curt @ 8:13 am in Barack Obama, Congress, Economy, Health Care, Politics, Socialism, Socialized Health Care, Universal Health Care | 199 viewsYou recall Waxman’s outrage over large companies, such as AT&T, informing its shareholders that they will be taking large hits due to ObamaCare:

After the passage of the health care reform bill, some public corporations announced the bill would have adverse affects on how they do business. Deere & Co. announced that it would cost them an additional $150M in expenses, Caterpillar stated in an SEC filing they would earn $100M less in 2010, Verizon sent emails to employees informing them of their expected costs to increase in the short term, and AT&T filed with the SEC that they expect a $1B hit because of the new law.Now, the the Subcommittee on Oversight and Investigations is calling on the “senior company officials” of each of those companies, and others, to come to D.C. and explain / prove their claims. The stated purpose of this meeting is, “to ensure that the [health care] law is implemented effectively and does not have unintended consequences.”

Waxman eventually canceled those hearings and now we know why. The companies were right:

When major companies declared that a provision of the new health care law would hurt earnings, Democrats were skeptical. But after investigating, House Democrats have concluded that the companies were right to tell investors and the government about the expected adverse effects of the law on their financial results.~~~In a memorandum summarizing its investigation, the Democratic staff of the committee said, “The companies acted properly and in accordance with accounting standards in submitting filings to the S.E.C. in March and April.”Moreover, it said, “these one-time charges were required by applicable accounting rules.” The committee staff said this view was confirmed by independent experts at the Financial Accounting Standards Board and the American Academy of Actuaries.Mr. Waxman, the chairman of the committee, and Mr. Stupak canceled a hearing at which they had planned to question executives on the effects of the law.A tabulation by the United States Chamber of Commerce shows that at least 40 companies have taken charges against earnings that total $3.4 billion since the law was signed.

Ed Morrissey:

Democrats knew full well that they had ended the tax credit for the subsidy that keeps retirees on private, employer-based prescription coverage. They did that deliberately in order to gain $5.4 billion in revenue to close the gap for the CBO analysis of ObamaCare. That money comes right off of the balance sheets of private industry — in fact, Democrats counted on it.Now the private sector has $3.4 billion less to invest in new jobs and expansion (with more writedowns coming), plus Democrats have incentivized these companies to dump their retirees into the overextended Medicare Part D program.

Do we hear a public apology by Waxman for insinuating the large companies, that employ tens of thousands of people, were just playing politics instead of following SEC laws?Nope….and we never will. He and his cohorts knew what they were doing, you have to vilify big business in their world of leftist ideals.

Cost of Health care bill much higher than previously claimed

The Obama administration on Friday defended the new health insurance law after a report from its own Medicare services agency showed the provisions will increase the nation's health care tab over the next 10 years instead of bringing costs down.

The sobering assessment by the Centers for Medicare and Medicaid Services concludes what Republicans had warned about during heated debate -- that the double-counting of Medicare spending -- as both savings and as a means to shore up the debt-ridden government fund for seniors' health care -- means the cost is unrealistic.

The analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years, or $311 billion, up from the $222 billion previous estimated. . . .

4/26/2010

"A bank tax is coming"

It was a short hallway conversation but spoke volumes about the dilemma facing Democrats, hungry for new revenues after emptying the cupboard on health care reform.

“I don’t think there’s much doubt that there will be a bank tax,” Senate Finance Committee Chairman Max Baucus told POLITICO. And more than ever, the Montana Democrat signaled that Congress will also crack down on wealthy hedge fund and private equity partners who shelter their income as capital gains — taxed at half the top 35 percent rate.

Three times in recent years, the House has voted to rein in the so-called carried interest provision — only to meet Senate resistance. That’s changing with the pressure to find revenues to pay for other priorities such as a $35 billion measure extending popular tax provisions for businesses and families.

“I’ve asked my staff to look at alternatives ... Carried interest will probably be part of the offsets,” said Baucus. “We were thinking of putting it on later as part of tax reform. But we’re here; we’re here now.”

Wealthy Democratic donors are sure to scream; Baucus concedes he could face opposition from his own party moderates. But isn’t the chairman himself the “very soul of the moderate Democrat?” a reporter asks. “I’m a ‘Do-the-Right-Thing’ Democrat,” Baucus grinned. . . .

Dems try to redo their health care bill, remember all their promises about how it would save costs?

When President Obama signed his health-care reform last month, he declared it will "lower costs for families and for businesses and for the federal government." So why, barely a month later, are Democrats scrambling to pass a new bill that would impose price controls on insurance?

In now-they-tell-us hearings on Tuesday, the Senate health committee debated a bill that would give states the power to reject premium increases that state regulators determine are "unreasonable." The White House proposed this just before the final Obama- Care scramble, but it couldn't be included because it violated the procedural rules that Democrats abused to pass the bill.

Some 27 states currently have some form of rate review in the individual and small-business markets, but they generally don't leverage it in a political way because insolvent insurers are expensive for states and bankruptcies limit consumer choices. One exception is Massachusetts: Governor Deval Patrick is now using this regulatory power to create de facto price controls and assail the state's insurers as cover for the explosive costs resulting from the ObamaCare prototype the Bay State passed in 2006.

National Democrats now want the power to do the same across the country, because they know how unrealistic their cost-control claims really are. Democrats are petrified they'll get the blame they deserve when insurance costs inevitably spike. So the purpose of this latest Senate bill is to have a pre-emptive political response on hand. . . .

Labour's big built in advantage in the UK

A ComRes telephone poll of 1,003 adults for ITV and the Independent newspaper, released late Monday, showed the Conservatives with 32%, the Liberal Democrats with 31% and Labour with 28%.

Labour's potential advantage—despite its flagging status in opinion polls—are prompting rivals to jockey for position. Mr. Clegg, for example, has complained of the prospect of unpopular Labour Prime Minister Gordon Brown "squatting" in No. 10 without a voter mandate. In such a scenario, anger could spread from Labour's political rivals to the public, where steam is building to demand serious reforms to one of the world's oldest parliamentary democracies.

Labour owes its ability to hang on despite the weak economy to several advantages. Since Tony Blair's landslide victory in 1997, Labour has an advantage in the number of seats it holds in Parliament that is out of proportion to its share of the popular vote. In the last election in 2005, Labour won 36.2% of the votes but 56.5% of the seats in Parliament. The Conservatives won 33.2% of the votes but only 31.5% of the seats. The Liberal Democrats won almost one in four votes but fewer than one in 10 of the seats.

The result: Labour won three percentage points more of the vote than the Conservatives, but dominated Parliament with 355 seats to the Tories' 197. To overcome that advantage, political analysts estimate that the Conservatives will need to win around six percentage points more of the vote, just to overcome the disparity.

The chief reason for this is that Labour wins seats in Parliament with fewer votes. Labour-heavy Scotland and Wales have more seats compared with their population than Tory-leaning England. Even in England, Conservative constituencies are larger. The average Tory seat held 72,950 voters, and the average Labour seat 66,802 . . .

The [National Association for Business Economics] April 2010 Industry Survey report presents the responses of 68 NABE members to a survey conducted between March 25, 2010, and April 10, 2010, on business conditions in their firm or industry and reflects first-quarter 2010 results and the near-term outlook. . . . The vast majority (73%) of respondents reported the fiscal stimulus enacted in February 2009 has had no impact on employment to date. While 68% also believe a jobs bill, such as the one recently enacted into law, will have no impact on payrolls, 30% do believe it will boost payrolls moderately.

The risks of being a cop

A Hamilton, Montana cop gets shot at when he pulls someone over for being drunk (video is here). While the video is what is interesting, the news story is here:

HAMILTON - A coroner's inquest found Tuesday that Hamilton Police Officer Ross Jessop was justified in shooting Raymond Thane Davis to death after the Hamilton man opened fire during a late-night traffic stop in January.It took a six-woman jury one hour to make its ruling following nearly five hours of testimony, which included a video that showed Davis pointing a pistol inches from Jessop's face and pulling the trigger.The click of the revolver's hammer hitting a previously fired round was audible in the recording.Davis fired a second time as the officer fell back and drew his own weapon.Jessop fired his pistol 14 times into Davis' vehicle as it sped away. One round hit Davis, 36, in the back and he died at the scene.Davis' .41 caliber revolver was recovered from the floorboard of his vehicle. Its hammer was cocked and ready to fire. . . .

New Fox News piece: Fears of Arizona's Immigration Law Are Bogus

When Arizona's new law was signed on Friday, Hispanics demonstrated outside the state capitol in Phoenix, fearful of what it would mean for them. "If a cop sees them and they look Mexican, he's going to stop me," a 18-year-old Hispanic told the Associated Press. "What if people are U.S. citizens? They're going to be asking them if they have papers because of the color of their skin." The young man claimed that he was that even though he was a U.S. citizen he risked being arrested and put in jail.

Other news stories discuss Hispanics believing that they will have to have to carry multiple IDs to avoid prison. "Even if you're legal, you're in fear that maybe your driver's license isn't going to be enough or if you're walking down the street and the police stop you," a 21-year-old University of Arizona college student told CNN. "It's a constant fear we're living in and even legal citizens are afraid to go out."

But it is a dangerous game stirring up fears of people being hunted down and put in jail because of their race or nationality. The law specifically bans picking up someone just because they are Hispanic or even because the person was originally from Mexico or any other country you can read a copy of the law right here. . . .

What fewer people have noticed is the phrase "lawful contact," which defines what must be going on before police even think about checking immigration status. "That means the officer is already engaged in some detention of an individual because he's violated some other law," says Kris Kobach, a University of Missouri Kansas City Law School professor who helped draft the measure. "The most likely context where this law would come into play is a traffic stop."As far as "reasonable suspicion" is concerned, there is a great deal of case law dealing with the idea, but in immigration matters, it means a combination of circumstances that, taken together, cause the officer to suspect lawbreaking. It's not race -- Arizona's new law specifically says race and ethnicity cannot be the sole factors in determining a reasonable suspicion. . . .

4/25/2010

Bill Clinton says that Larry Summers misled him on financial regulation changes during the 1990s

Personally, I think that the changes that the Clinton administration agreed that are being discussed here actually made things less risky (e.g., such as Glass-Steagall). But the actions that they took that aren't being discussed (e.g., forcing banks to make loans to risky home owners) were the problem that they still aren't talking about.

Clinton administration critics on the left have said the administration was wrong to lift restrictions that prevented banks from offering commercial banking, insurance and investment services.

The Glass-Steagall Act prevented banks from offering all of these services, but key provisions were repealed in 1999. Summers and the administration supported those moves at the time.

Former President Bill Clinton recently said he received bad advice from Summers on derivatives, another key part of the financial reform legislation now under consideration.

Clinton said it was wrong to think rules on derivatives did not need more transparency.

“I think they were wrong and I think I was wrong to take” their advice, Clinton said in an interview last week with ABC’s “This Week.”

Summers and his predecessor as Clinton’s Treasury secretary, Robert Rubin, had argued that only a handful of people would be buying derivatives and they didn’t need extra protection, Clinton said.

Austan Goolsbee versus Phillip Swagel on whether there are bailouts in the Financial regulation bill

President Obama’s approach, as embodied in Democratic Senator Chris Dodd’s bill, is for discretion and thus for bailouts. Top administration officials state that they will impose losses on counterparties such as lenders to a failing firm. The reality, however, is that the Senate bill gives the government discretion, without a vote of Congress, to put money into a failing firm to pay off creditors. Shareholders will take losses but creditors can benefit from government-provided funds. Regardless of the administration’s intentions, markets participants will understand that the Senate financial regulation bill allows for bailouts, and this will give rise to riskier behavior that in turn makes future bailouts more likely.

A particularly misleading claim from the administration is that the bill is not a bailout because any losses would be recouped through taxes on banks after the fact. The intervention itself is the essence of the bailout, not whether there are losses to the government. Imagine if the Troubled Asset Relief Program was to end up with a profit—not just recouping the money put into firms over the past two years but actually making a return for taxpayers. No one would suggest that the TARP is then somehow not a bailout. Recouping funds after the fact might be a good way to protect taxpayers, but it is preposterous to claim that this makes the Dodd bill anything other than a bailout. The ability of the government to put money into a failing firm and make payments to counterparties at its discretion is what makes the Dodd proposal a permanent bailout authority, not the issue of who pays after the fact.

Moreover, the discretion given to the government in the Senate proposal opens the door to undesirable actions such as allowing the administration to write checks to favored parties. This concern is not theoretical: such mischief took place in the bankruptcies of Chrysler and General Motors, as the two auto companies were used as conduits to transfer billions of dollars from TARP to the president’s political supporters. . . .

The Dodd bill allows two forms of a bailout, since the government can put cash directly into a failing firm or guarantee its debt. The Dodd proposal is a bailout bill, plain and simple. . . .

GOOLSBEE: Well, the president is totally committed and it's one of his key principles that we're going to end too-big-to-fail, we're going to end the bailout era that began under the last president, for good. That's not going to happen anymore. We can open -- we're open to negotiating details obviously as we start getting into it. They're complicated. Some of these financial risks are more like worms where you could chop them in half, but it doesn't kill them, it just gives you two different worms. Bear Stearns, AIG, they weren't the biggest, they were just the most dangerous, and we've got to come at this from every side. Look, we're open to looking at ending too-big-to-fail on the size angle, on the what risky investments they're allowed to take, looking at the derivatives component so that AIG-like, they can't threaten to blow up the whole world because of -- because they have some of this $600 trillion pool of derivatives that we know virtually nothing about, that are in the dark. All of that ends when we sign this bill. If you look at the bill and take a step back -- I don't know much about the legislative strategies that are going on in the Senate. They are important. I do know that the president has laid out what this bill does, is we're going to end bailouts, we're going to hold accountable the people that get into the messes. So if they get in trouble, they fail. All we're going to do is pay funeral expenses, and we're going to have the strongest consumer protections ever in this country. . . .

Regulatory overhaul legislation working its way through Congress will end taxpayer-funded bailouts "once and for all," President Barack Obama said Saturday.

Mr. Obama used his weekly radio address to build on the administration's argument that lawmakers need to quickly pass the most wide-ranging changes to financial market oversight since the Great Depression.

"That's how we'll help to put an end to the cycles of boom and bust that we've seen," Mr. Obama said. "And that's how ... we'll not only revive the economy, but help to rebuild it stronger than ever before." . . .

"General Motors repayment fraud"

The Washington Times has this something new to report on the "repayment" here. They make it quite clear that General Motors was only able to pay back the loan by using government TARP money.

The chairman and CEO of General Motors, Ed Whitacre, though makes it sound as if the company was able to pay things back early because the company has been doing quite well.

Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working. It is also an important step toward eventually reducing the amount of equity the governments of the U.S., Canada and Ontario hold in our company. Combined, these governments hold a majority of GM's equity, and we want citizens to know how their governments' money is being put to work. . . .

A copy of one of their ads appearing on all the Sunday morning talk shows that touted the repayment is here.

As the Washington Times piece makes clear, part of the bailout went into an “escrow fund,” and that government money is being used to pay back the small part of the bailout that was officially a loan. An article in Forbes shows that at the same time that this loan has been paid back GM is asking for another $10 billion loan to retool its plants to meet the stiffer Corporate Average Fuel Economy standards, and paying back one government loan — with other government money — will make it easier to get another government loan.

MR. GREGORY: If the, if the, if the, if the complaint is government's not up to it, we had regulators before, can they do it this time, and we're so worried about bailouts, look at the track record of bailouts so far. The president was boasting yesterday that GM and Chrysler have paid off their debts, not completely, but, but, but way ahead of schedule. TARP is now $186 billion back. The overall payment is supposed to be around $87 billion. The record's been pretty good that the government's and the taxpayer have done OK so far in bailouts, have they not?

SEN. SHELBY: First of all, the payback by General Motors and Chrysler will never happen, not all of it. That's misleading, even what the president said there. And they paid back some money that they were already given by the TARP money. They haven't paid back the other, and they won't. Some of the banks have paid back the money, and that's good. But we should never go down that road again. If the regulators do their job and if we tighten this legislation, we won't have to visit it again.

BOB SCHIEFFER: But I-- I guess, the question that I have is-- is, when did you decide that? Because, clearly, you thought General Motors was too big to fail? You bailed General Motors out. When did you decide these bailouts are not a good thing? I’m not saying they’re good or bad. I’m just asking--LARRY SUMMERS: Well, let’s take-- let’s take General Motors, Bob. Shareholders, zero; chief executive officer, gone; senior management team, changed; bondholders, largely wiped out. Yes, the President did decide and it took courage because many people opposed it at a moment when the credit markets weren’t working to let General Motors go bankrupt and lend General Motors money. General Motors paid back the loan part of the support this year. The value of General Motors is today much higher than anyone thought likely a year ago. You know, President took an enormous amount of criticism for what he did. . . .

Can Republicans take control of the Senate?

This estimates are from Real Clear Politics averages of different polls. But these averages make some assumptions about who will be the Republican nominee and also include some older polls. For example, if Tommy Thompson runs in Wisconsin, he is ahead in the polls. Thompson isn't included yet because he hasn't made a decision to run. The same is true in Washington state, where if Rossi challenges Murray and you look at only the polls done in April, Rossi is clearly ahead. These two races would end up giving Republicans a 51 to 49 majority in the Senate. If Thompson and Rossi do run, that could dramatically increase the odds that Republicans will take the Senate (much more than the 17.5 percent that inTrade currently predicts).

If Tom Campbell wins the Republican primary (and he is currently ahead), the last three polls in that race suggest that he would be exactly tied with Barbara Boxer.

A useful description of what Goldman Sachs did

Imagine that you want to make a bet against a sports team, say the New York Yankees. The Yankees have had a strong run, but, poring over the data, you have come to the conclusion that they're going to start losing. So you go to a bookmaker (in a district where bookmaking is legal, of course) to place a bet. The bookmaker now looks for someone to take the other side of this bet. Once the other party is found, the deal is made. That, in essence, is the transaction that took place in 2007 regarding the future direction of the American residential-housing market, in which Goldman Sachs acted as the bookie, and which the Securities and Exchange Commission now charges was "fraud." . . .

The first is that John Paulson—the fund manager who wanted to bet against the housing market—was allowed to select the securities he wanted to bet against. This is disputed—but even if it's true, so what? Here's what a routine hedge transaction looks like on Wall Street. Somebody decides to place a bet against some set of stocks or securities. That person approaches a Wall Street firm and says, in effect, "Can you find me someone who wants to take the other side of this bet?" And the firm goes out and finds someone who has the opposite view on those securities. This is how large companies offset the risks to their balance sheet from fluctuating currency, energy, or commodity costs. They often choose the instrument they want to bet against. . . .

Fleshing out Goldman Sachs Complaint

Fast forward to last Friday, when the Securities and Exchange Commission filed a complaint against Goldman Sachs, alleging that the firm violated the law when it sold a collateralized debt obligation based on mortgage-backed securities without disclosing that the CDO was assembled with the help of hedge fund investor John Paulson.

On its face, the complaint seems flimsy. Paulson has since become famous because his firm made billions by betting against mortgage-backed securities. But he wasn't a big name then, and the sophisticated firm buying the CDO must have assumed the seller believed its value would go down.

That's not the only fishy thing about the complaint. Yesterday came the news, undisclosed by the SEC Friday, that the commissioners approved the complaint by a 3-2 party-line vote. Ordinarily, the SEC issues such complaints only when the commissioners unanimously approve.

You may want to believe the denials that the Democratic commissioners timed the action in coordination with the administration or congressional leaders. But then you may want to believe there was no political favoritism in the Chrysler deal, too. The SEC complaint looks a lot like Gangster Government to me. . . .